Ch11+-+Equity

Ch11+-+Equity - Chapter 11 – Stockholders’ Equity •...

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Unformatted text preview: Chapter 11 – Stockholders’ Equity • Characteristics of a corporation • Characteristics of stock • Issuing common stock • Treasury stock • Cash dividends, stock dividends and stock splits • Preferred stock 11-1 Characteristics of a corporation 11-2 1. Publicly-held corporations • May have many stockholders. • Stock is traded on a national exchanges (NYSE, etc.) • Example: DineEquity 2. Privately-held corporations • Usually have only a few stockholders. • Does not offer its stock for sale to the general public. • Example: Levi Strauss Classification of Corporations 11-3 Advantages of a Corporation 11-4 Advantages of a corporation Continuous life Easy to transfer ownership Provides limited liability What is the maximum liability? How is this done? What does this mean? Disadvantages of a Corporation 11-5 Disadvantages of a corporation Double taxation of earnings Government regulations Corporate management Why is this an issue? What laws impact companies? Who is taxed? Separate Legal Entity Because a corporation is a separate legal entity , it can . . . Own assets Sue and be sued Incur liabilities Enter into contracts 11-6 Stockholders’ Rights 1. Vote : in person or by proxy. 11-7 1. Dividends : proportionate distribution of profits. 1. Preemptive right : keep the same percentage ownership when new shares are issued. 1. Residual claim : Proportionate distributions of assets in a liquidation Corporate Organization Chart Elected by shareholders Appointed by directors Vice President Operations Vice President Marketing Vice President Finance Vice President President Chairman and Board of Directors Stockholders Personnel 11-8 Stockholders’ Equity – Components DineEquity December 31, 2008 (Amounts in $000’s except per share data) 11-9 Stockholders' equity Preferred stock, $1 par value, 220,000 shares authorized, 190,000 shares issued and outstanding …………………. 87,050 Common stock, $.01 par value, 40,000,000 shares authorized, 23,696,950 shares issued and 17,466,355 shares outstanding …………………………………………... 237 Additional paid-in-capital ……………………………………… 165,315 Retained earnings ……………………………………………… 145,810 Treasury stock, at cost (6,230,595 shares) ………………… (276,519) Other ……………………………………………………………… (29,408) Total Stockholders’ equity 42,767 Characteristics of stock 11-10 Authorized, Issued, and Outstanding Capital Stock The maximum number of shares of capital stock that can be sold to the public....
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This note was uploaded on 02/17/2010 for the course ECON ECON taught by Professor Shomali during the Spring '04 term at Berkeley.

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Ch11+-+Equity - Chapter 11 – Stockholders’ Equity •...

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